U.S. Bank, N.A. v. Davis

531 P.3d 69, 153 Haw. 246

• Court: Hawaii Intermediate Court of Appeals
• Decided: June 29, 2023
• Docket: CAAP-20-0000027
• Status: Published

Opinion

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Electronically Filed Intermediate Court of Appeals CAAP-XX-XXXXXXX 29-JUN-2023 07:54 AM Dkt. 49 SO

NO. CAAP-XX-XXXXXXX

IN THE INTERMEDIATE COURT OF APPEALS

OF THE STATE OF HAWAI#I

U.S. BANK, N.A., SUCCESSOR TRUSTEE TO LASALLE BANK NATIONAL ASSOCIATION, ON BEHALF OF THE HOLDERS OF BEAR STEARNS ASSET BACKED SECURITIES I TRUST 2006-HE9, ASSET-BACKED CERTIFICATES SERIES 2006-HE9 , Plaintiff-Appellee, v. WILLIAM LEE DAVIS; VANDETTA IRENE DAVIS, Defendants-Appellants, and DEPARTMENT OF TAXATION, STATE OF HAWAI#I, JOHN and MARY DOES 1-20; DOE PARTNERSHIPS, CORPORATIONS or OTHER ENTITIES 1-20, Defendants

APPEAL FROM THE CIRCUIT COURT OF THE SECOND CIRCUIT (CIVIL NO. 2CC171000032)

SUMMARY DISPOSITION ORDER (By: Leonard, Presiding Judge, Hiraoka and McCullen, JJ.)

Defendants-Appellants William Lee Davis and Vandetta

Irene Davis (the Davises) appeal from the December 17, 2019

Judgment entered by the Circuit Court of the Second Circuit

(Circuit Court).1 The Davises also challenge the Circuit Court's

December 17, 2019 Findings of Fact; Conclusions of Law; Order

Granting Plaintiff's Motion for Summary Judgment, and for

1 The Honorable Rhonda I.L. Loo presided. NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

Interlocutory Decree of Foreclosure Against All Parties

(Foreclosure Decree).

The Davises raise three points of error, contending

that the Circuit Court: (1) abused its discretion in concluding

that Plaintiff-Appellee U.S. Bank, N.A., Successor Trustee to

Lasalle Bank National Association, on Behalf of the Holders of

Bear Stearns Asset Backed Securities I Trust 2006-HE9, Asset-

Backed Certificates Series 2006-HE9's (U.S. Bank) established

that it had standing to sue for foreclosure at the time this

action commenced; (2) abused its discretion by granting

Plaintiff's Motion for Summary Judgment, and for Interlocutory

Decree of Foreclosure Against All Parties (MSJ) based on business

records that lacked sufficient foundation and a declaration that

was based upon these inadmissible business records; and (3)

abused its discretion by granting the MSJ despite U.S. Bank

failing to establish that it provided the Davises with adequate

notice of default.

Upon careful review of the record and the briefs

submitted by the parties and having given due consideration to

the arguments advanced and the issues raised by the parties, we

resolve the Davises' points of error as follows:

As a preliminary matter, we note that an appellate

court reviews a circuit court's grant or denial of summary

judgment de novo, not for an abuse of discretion. See, e.g.,

Querubin v. Thronas, 107 Hawai#i 48, 56, 109 P.3d 689, 697

(2005). 2 NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

The Davises contend that U.S. Bank failed to establish

that it had standing at the time of the filing of the Complaint

(Complaint), as required by the Hawai#i Supreme Court in Bank of

Am., N.A. v. Reyes-Toledo, 139 Hawai#i 361, 370, 390 P.3d 1248,

1257 (2017), and subsequent cases.

Here, in support of the MSJ, U.S. Bank attached a

declaration of Paige Bushnell (Bushnell Declaration), an officer

of its loan servicer, Select Portfolio Servicing, Inc. (SPS),

introducing and authenticating, among other things, copies of:

the subject blank-indorsed note (Note); the subject mortgage; two

assignments of the subject mortgage; a printout from the website

bkfsloansphere.com dated April 2, 2019 and entitled "DAVIS -

Notes" (Printout); various loan payment history records; and the

Default Notice. The indorsement on the Note is not dated.

As stated in Reyes-Toledo, "[w]hen indorsed in blank,

an instrument becomes payable to bearer and may be negotiated by

transfer or possession alone until specially indorsed." Id.

Thus, when a lender forecloses on a mortgage secured by a blank-

indorsed note, the lender must establish, inter alia, that it

held the note at the time it filed the complaint. Id.

Additionally, a foreclosing party is considered to be the holder

of a note if its agent possesses it. Bank of Am., N.A. v.

Anderson, No. CAAP-XX-XXXXXXX, 2017 WL 122998, at *5 (Haw. App.

Jan. 12, 2017) (mem.); see, e.g., U.S. Bank Tr., N.A. v.

Verhagen, 149 Hawai#i 315, 327-28, 489 P.3d 419, 431-32 (2021)

3 NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

(accepting a copy of a bailee letter as evidence of possession

via lender's agent).

Here, the Note does not reflect the date of the

indorsement, and there is no evidence establishing when the

indorsement occurred. The Bushnell Declaration states that U.S.

Bank, "directly or through an agent, has possession of" the Note,

and "was in possession of the Note at the time of the filing of

the complaint." However, the only support for this assertion is

the Printout, which is unclear and unexplained. It merely

alludes to U.S. Bank's counsel possessing the Note on March 9,

2015, and SPS possessing the Note on March 13, 2015, nearly two

years before the January 26, 2017 Complaint. Bushnell's vague

testimony that U.S. Bank possessed the Note "directly or through

an agent" at the time of the Complaint and at the time of her

declaration is conclusory, and fails to identify which entity

possessed the Note at which point in time.

Accordingly, we conclude that U.S. Bank failed to

establish that, at the time of the filing of the Complaint, U.S.

Bank had standing to sue for foreclosure. In light of our

conclusion that U.S. Bank failed to properly establish standing,

we need not reach the Davises' other points of error.

4 NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

The Circuit Court's December 17, 2019 Foreclosure

Decree and Judgment are vacated, and this case is remanded to the

Circuit Court for further proceedings.

DATED: Honolulu, Hawai#i, June 29, 2023.

On the briefs: /s/ Katherine G. Leonard Gary Victor Dubin, Presiding Judge Matthew K. Yoshida, for Defendants-Appellants /s/ Keith K. Hiraoka William Lee Davis and Associate Judge Vandetta Irene Davis. /s/ Sonja M.P. McCullen Lester K. M. Leu, Associate Judge Lansen H. G. Leu, Daniel K. Kikawa, for Plaintiff-Appellee.